Ubs Group Ag · SIX:UBSG
Ubs — Debt Investor Presentation (November 2023)
37 slides from Ubs's debt investor presentation, Nov 7, 2023
Slide 1: Third quarter 2023 Fixed Income investor presentation
Third quarter 2023 Fixed Income investor presentation This document should be read in conjunction with our 3Q23 report and earnings presentation, available on ubs.com/investors 7 November 2023
Slide 2: Important information
Important information Forward Looking Statements: This presentation contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance, statements relating to the anticipated effect of transactions and strategic initiat
Slide 3: Table of contents
Table of contents Key 3Q23 financial Group balance achievements performance sheet Highlights Highlights Slides 3-8 Slides 10-13 Slides 15-23 2
Slide 4: 3Q23 key achievements
3Q23 key achievements Delivered underlying profitability with continued strong flows Stayed close to clients as we helped them navigate challenging markets Executed on our integration at pace while planning for the next milestones Reinforced our balance sheet for all seasons 3
Slide 5: Delivering on integration priorities
Delivering on integration priorities 1 2 3 4 Franchise stabilization Funding cost Balance sheet Cost base right-sizing and client win-back efficiencies optimization +22bn ~450m (52bn) ~3bn Net new money, Gross funding cost LRD reduced in Annualized exit rate gross GWM efficiencies delivered in 3Q NC
Slide 6: Client trust and confidence demonstrated by strong flows in GWM and P&C
Client trust and confidence demonstrated by strong flows in GWM and P&C Wealth management Wealth management Swiss businesses Net new money / net new assets, USD bn1 Net new deposits, USD bn1 Net new deposits, CHF bn 28 16 18 17 13 14 9 8 5 3 3 5 2 4 3 4 (3) (2) (0) (7) (7) (5) (19) (30) (27) (29) (3
Slide 7: Accelerating the rundown of Non-core and Legacy assets
Accelerating the rundown of Non-core and Legacy assets Finalized perimeter with further active unwinds Rundown based on natural run-off profile Credit and market risk RWA1 RWA bn bn Natural run-off profile to be accelerated with >80% driven by active unwinds when economically accretive active unwind
Slide 8: Integration planning and execution well underway
Integration planning and execution well underway Select 3Q achievements 4Q23 key priorities 2024 milestones ✓ Commenced onboarding of − Legal entity consolidation 1. Execute legal mergers of significant subsidiaries CS employees and flows onto planning UBS systems and platforms 2. First waves of cli
Slide 9: Working towards ~15% RoCET1
Working towards ~15% RoCET1 Underlying return on CET1 capital Illustrative ~15% ~15% ~14% underlying RoCET1 CET1 capital ratio 2026 exit rate over medium-term >10bn <70% gross cost saves by underlying cost/income end-2026 vs. FY22 ratio, 2026 exit rate Capital returns Committed to existing progressi
Slide 10: 3Q23 financial performance
3Q23 financial performance Highlights 9
Slide 11: Strong progress amid challenging market conditions
Strong progress amid challenging market conditions Underlying profit / (loss) before tax 3Q23 USD bn • Underlying revenues +6% QoQ • Underlying operating 1.1 expenses (5%) QoQ 0.8 0.7 0.9 0.8 14.4% 844m CET1 capital ratio Underlying 0.1 0.2 PBT (0.1) (0.1) (0.2) 195bn 89.3% (0.6) (0.7) Total loss-ab
Slide 12: 3Q23 underlying PBT of 0.8bn, higher revenues and lower costs QoQ
3Q23 underlying PBT of 0.8bn, higher revenues and lower costs QoQ Profits 3Q23 bn 1.0 +1.4 (255m) (785m) PBT Net profit 0.5 0.8 Estimated for three months combined, refer 0.4 to slide 29 for details 0.6 (4.0%) 1.1% RoCET1 RoCET1 underlying 2Q23 included 548m day-1 ECL recognition (2.1) (0.3) on acqu
Slide 13: 3Q23 underlying total revenues 10.7bn, up 6% QoQ
3Q23 underlying total revenues 10.7bn, up 6% QoQ Total revenues bn 1.0 11.7 ~450m QoQ benefit in Group Items from fully repaying PLB and ELA+ in August, ~100m residual cost in 3Q +6% 0.6 10.7 958m Pull to par and other PPA effects not 10.1 0.1 0.0 0.2 reflected in underlying in 3Q (0.0) (0.2) ~650m
Slide 14: 3Q23 underlying operating expenses 9.6bn, down 5% QoQ
3Q23 underlying operating expenses 9.6bn, down 5% QoQ Operating expenses bn 2.1 11.6 13k Headcount reduction vs. Dec-22 pro forma2 (5%) 10.0 (0.2) 0.0 9.6 >1bn (0.0) (0.1) Integration-related expenses (0.1) (0.0) expected in 4Q 2Q23 GWM P&C AM IB NCL Group Items 3Q23 Integration- 3Q23 estimated unde
Slide 15: Group balance sheet
Group balance sheet 3 UBS
Slide 16: Capital and leverage ratios
Capital and leverage ratios 35.7% 12.1% − We expect our CET1 ratio to remain ~14% throughout the integration timeline − In 3Q23, we took decisive actions to reduce NCL RWAs by 5 HoldCo 18.9% 6.4% bn by actively de-risking portfolios, with further 1 bn decline TLAC: 8.8% TLAC: 25.6% through natural r
Slide 17: CET1 capital and RWA walk
CET1 capital and RWA walk CET1 capital Risk weighted assets USD bn USD bn (2%) (2%) 80.3 556.6 0.4 0.0 (0.3) 546.5 (4.9) (0.1) (5.5) (0.6) 78.6 Expect regulatory-driven (0.8) updates to credit and counterparty credit risk models will result in an RWA increase of around 2bn in 4Q23 318.5 2Q23 PBT Cur
Slide 18: Funding overview
Funding overview Group funding bn 802 835 786 1,277 1,252 3Q23 1% 1% 1% 100% 2% 1% − (2bn) QoQ, mainly driven by negative 85bn total comprehensive income attributable shareholder equity to shareholders 56% 59% 65% 65% 67% − Of which short-term 107bn, including 419bn 38bn SNB funding debt − Of which
Slide 19: Capital markets issuances and redemptions
Capital markets issuances and redemptions Issuances and redemptions Upcoming maturities and first calls2 USD bn USD bn 2022 9M231 20 72 19 19 3 We are committed to 0 16 2 33 managing our funding 2 1 31 2 resources prudently 2 0 0 3 29 03 0 4 During 3Q23, we issued USD 5 3 4.5bn of HoldCo debt, USD 5
Slide 20: Long-term wholesale funding diversification
Long-term wholesale funding diversification Group funding 3Q23, bn Covered Bonds <1 year Other 3% >5 years 18% 8% 25% OpCo 25% By EUR By 29% By remaining USD source currency 59% HoldCo maturity 65% 3-5 years AT1 1-3 years 19% 37% 7% CHF 4% As of quarter-end, does not include UBS AG / CS AG structure
Slide 21: Liquidity
Liquidity Liquidity coverage ratio1 Well diversified liquidity pool, and diligent liquidity management quarterly averages including daily stress testing Average high-quality liquid assets1, bn Average high-quality liquid assets1,2, 253 249 240 239 230 257 368 3Q23 Securities 28% 368bn of which ~94%
Slide 22: Deposits
Deposits Continued stabilization in 3Q23 22bn 25bn 7bn GWM1 net new money, USD GWM net new deposits, USD P&C net new deposits, CHF Further details on flows on slide 5 A well diversified deposit base Other 9% EUR Time Demand 10% deposits 32% USD UBS P&C 38% 41% 40% By By client By type currency segme
Slide 23: High-quality loan portfolio
High-quality loan portfolio Loans and advances to customers On-balance sheet, 3Q23 Other 11% Mortgages1: 340bn, average LTV ~50% Corporates 9% Lombard: 159bn › Fully collateralized, with daily monitoring of margin requirements 625bn Mortgages1 Corporates: 56bn 54% › 22bn large corporate clients › 34
Slide 24: Credit loss expense / (release) and credit impaired exposures
Credit loss expense / (release) and credit impaired exposures Credit loss expense / (release) ECL coverage ratio for core loan portfolio (stage 3)2 m On balance sheet 3Q22 4Q22 1Q23 2Q23 3Q23 25% GWM 7 3 15 136 2 24% P&C (15) (4) 16 234 168 IB 4 8 7 132 4 23% 23% NCL 119 125 Other1 0 0 0 3 6 22% Tot
Slide 25: Appendix
Appendix 24
Slide 26: Credit ratings peer comparison
Credit ratings peer comparison Long-term senior unsecured debt – operating company, as of 3.11.23 MOODY’S S&P FITCH Baa2 Baa1 A3 A2 A1 Aa3 Aa2 Aa1 BBB- BBB BBB+ A- A A+ AA- AA BBB- BBB BBB+ A- A A+ AA- AA Barclays BNP BoA Citi CS DB GS HSBC JPM MS SocGen UBS [No arrow] Review for downgrade Outlook n
Slide 27: Credit ratings peer comparison
Credit ratings peer comparison Long-term senior unsecured debt – holding company, as of 3.11.23 MOODY’S S&P FITCH Ba1 Baa3 Baa2 Baa1 A3 A2 A1 Aa3 BB+ BBB- BBB BBB+ A- A A+ AA- BB+ BBB- BBB BBB+ A- A A+ AA- Barclays BNP1 BoA Citi DB1 GS HSBC JPM MS SocGen1 UBS2 [No arrow] Review for downgrade Outlook
Slide 28: Legal structure and capital position
Legal structure and capital position Legal entity structure as of 30 September 2023 UBS Group AG consolidated We are finalizing our plans towards our target legal entity structure, with a single parent bank and Target structure UBS Group AG Credit Suisse’s significant legal entities merged or 100% i
Slide 29: Balance sheet
Balance sheet For the quarter-end 3Q23 1,645 1,645 1. Cash and balances at central banks 107 a a) Short-term borrowings2,3 1 262 15 b 2. Loans and advances to customers b) Securities financing transactions 3. Securities financing transactions at amortized cost at amortized cost c) Customer deposits
Slide 30: Capital requirements and eligibility criteria
Capital requirements and eligibility criteria Group consolidated requirements Grandfathering rules Going concern RWA LRD Gone concern RWA LRD Any going concern-eligible capital above the Minimum capital 4.50% 1.50% Base requirement 9.65% 3.38% minimum requirement can be counted towards equal to 75%
Slide 31: UBS Group structure
UBS Group structure We expected to merge Credit Suisse AG into UBS AG in 2024 As of 30 September 2023 ✓ ✓ ✓ ✓ ✓ ✓ ✓ Issuing entities 1 Other non-US subsidiaries are generally held either directly by UBS AG or indirectly through UBS Switzerland AG or UBS Asset Management AG; 2 Of which 98% held by Cr
Slide 32: Year-to-date issuances
Year-to-date issuances 9M23 issuances Notional Coupon Issuance Call/ ISIN Instrument Currency (bn) rate (%) date Maturity 20 CH1236363391 TLAC EUR 1.000 4.375 11.1.23 11.1.30 16 2 US902613AU26 TLAC USD 1.750 5.711 12.1.23 12.1.26 US902613AV09 TLAC USD 2.250 5.959 12.1.23 12.1.33 0 0 3 CH1255915006 T
Slide 33: Year-to-date redemptions
Year-to-date redemptions 9M23 redemptions Notional Coupon Call/ ISIN Instrument Currency (bn) rate (bps) Maturity 20 CH0400441280 AT1 USD 2.000 5.000 31.1.23 16 2 AU3FN0041034 OpCo AUD 0.525 3mBBSW+90bps 8.3.23 AU3CB0251197 OpCo AUD 0.275 3.250 8.3.23 0 0 3 XS2149270477 OpCo EUR 2.000 0.750 21.3.23
Slide 34: UBS Liquidity & Funding (Risk Management) Framework
UBS Liquidity & Funding (Risk Management) Framework Liquidity coverage ratio Net stable funding ratio Group Treasury • Proposes the liquidity and funding strategy • Maintains the UBS L&F risk management framework 100% 100% (together with 2nd line of defence), including the BCBS REQUIREMENT BCBS REQU
Slide 35: Main UBS rated entities
Main UBS rated entities MOODY’S S&P FITCH UBS Group AG A-/Negative A/Stable UBS AG Aa3/Negative A+/Stable A+/ Stable UBS Switzerland AG A+/Stable A+/ Stable UBS Europe SE Aa3/Negative A+/Stable A+/ Stable UBS Americas Holding LLC A-/Negative UBS Bank USA A+/Stable A+/ Stable UBS Securities LLC A+/St
Slide 36: Our reporting
Our reporting ubs.com/investors Other quick links › Quarterly reporting › Bondholder information › Capital instruments › Benchmark bonds › Green bonds › Digital bonds › Ratings Link Link Link Link Link 35
Slide 37: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements Cautionary Statement Regarding Forward-Looking Statements | This presentation contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance, statements rela
UBS Group — Debt Investor Presentation (November 2023) on 6ix